Our 2013 Group Benefits Provides Report covered many topics, but we weren’t able to get to all of them in the magazine. Below are the answers to two questions that weren’t covered.
Q. Are you seeing more interest in flex plans and healthcare spending accounts?
Brad Fedorchuk, vice-president, group marketing, Great-West Life: We have not seen a strong uptake in flex plans, perhaps due to the challenges plan sponsors face in communicating difficult issues to members. For example, a low interest rate environment has put pressure on long-term disability and life insurance rates. The resulting impact of insurance pricing volatility on a flex plan can be challenging for plan sponsors to control or to communicate to members. On the other hand, HCSAs have surged over the past few years, particularly in the small- to medium-sized employer segment. This may be because they offer benefits that employees value, while providing stability to employers by fixing a cap on potential worst-case cost scenarios.
Marilee Mark, vice-president, marketing, group benefits, Manulife Financial: Yes to both. We’re seeing flex plans move down market, too, along with an uptick in interest in not just HCSAs but also taxable- and wellness spending accounts. Offering employees choice, but still taking steps to manage cost, are the two drivers. Employees can spend their benefits dollars to suit their needs, and employers can define the amount of their investment in the plan.
Jean-François Chalifoux, senior vice-president, group business insurance, Desjardins Financial Security: Flex plans aren’t as popular as they used to be, but they’re an excellent way to attract and retain talent because plan members can choose options based on their own needs. One drawback is that they tend to cost more than traditional plans, which provide the same coverage for all plan members. We are seeing more interest in HCSAs because they give plan sponsors greater control over health benefit costs while allowing plan members the flexibility to choose where they want to apply their benefits.
Stuart Monteith, senior vice-president, group benefits, Sun Life Financial: Flex plans are here to stay–if anything–we need to start calling benefits plans Flex Plus. Benefit choices need to continue to evolve and give employees the option to pick benefits that make a difference to their lives. Especially with Generation Y employees, we are seeing a focus on healthy living–so it is important to offer benefit options that promote health, as opposed to just benefits when one is already sick.
Carl Laflamme, vice-president, national sales and marketing, SSQ Financial: Yes, we definitely see more interest in the flex plans and in the healthcare spending accounts. Clients want to reduce their costs and are seeking to offer greater flexibility for their employees.
Chris White, vice-president, health and benefits, Aon Hewitt: Yes. Employers are increasingly looking for ways to integrate their compensation and benefit programs into a more holistic offering and at the same time are attempting to create more flexible arrangements to better meet the needs of a diverse workforce and attract and retain key talent. Efforts in this area consist primarily of offering more comprehensive flexible benefit programs providing employees with choices in the levels of their life insurance, disability, health care and even retirement income protection.
Brian Lindenberg, senior partner, Mercer: Every year we see more interest in adding plan flexibility. We see less interest in implementing “full flex” with more plan sponsors focused on adding flexibility through taxable and non-taxable spending accounts together with voluntary benefits (individual products). Flex makes sense for many reasons not the least of which is responding to the needs/wants/expectations of an increasingly diverse workforce.
Q. How are plan sponsor attitudes changing around investing in wellness initiatives as a way to contain benefits costs?
Carl Laflamme: They believe that adopting healthy lifestyle habits will be profitable in the long term for their employees. On the other hand, we have clients who believe in miracles by thinking that posting a couple of newsletters in the lunch room will significantly reduce costs in the following six months.
Chris White: We are seeing plan sponsors revisiting the ROI equation and realizing that obtaining “R” (return) requires proportionate “I” (investment). Currently, the most prevalent programs include activities such as health articles and lunch and learns that are relatively low cost, but which also have low return, if any can be measured. However, plan sponsors are starting to consider higher cost programs such as screening, coaching and condition management, with greater (measureable) expected return.
Brian Lindenberg: Workplace wellness continues to gain traction in the market however the cost savings potential related to these programs still seems to be a secondary consideration. Employers are investing in these programs because they help enhance the employee value proposition and because – candidly – it feels like the right thing to do. Perhaps as Canadian based data quantifying the return on investment of these programs becomes more robust – the cost saving potential will be a bigger driver of investment decisions. Having said this for the majority of the market I still believe it will be a secondary consideration.
Brad Fedorchuk: Large employers are the most likely employer segment to sustain persistent wellness programs. Small- and medium-sized employers are still struggling with what a wellness initiative is and whether they have the staff resources to implement it.
Marilee Mark: There’s definitely a greater appetite for targeted programs based on their employee demographics or plan experience, for example, as long as the program has measurable outcomes. That’s key – being able to set specific objectives and knowing whether or not the program delivered the results they set out to achieve.
Stuart Monteith: A year or so ago, we saw sponsors cross an important line when it comes to wellness. We used to wonder whether an employer wanted a wellness plan or wanted to be seen having a wellness plan. Now, they want a wellness plan to focus on prevention and retention. More Canadian organizations are aware of, implement and measure the return on investment of workplace wellness programs.
Jean-François Chalifoux: Plan sponsors are starting to realize that there is a direct link between the well-being of their plan members and the well-being of their businesses. However, not many are taking advantage of these sorts of services yet, and most that do are large companies or organizations.